A couple of articles published this week on Axios.com [1], a provider of technology, economy, and political news, take a lesser-seen optimistic approach to matters including a recent report about millions of Americans missing mortgage and rent payments [2] and news about Congress' failure to pass an updated stimulus bill [3].
Axious Markets editor Dion Rabouin [4] allows that, indeed, six million Americans last reported month were behind on a mortgage/rent bill, however, he notes [5], the Mortgage Bankers Association (MBA), which initiated said study, also showed that [6] 3.4 million homeowners were enrolled in federal forbearance programs the same month.
To further put things in perspective, data on lower-income rental units show lower payment rates, but at numbers that are broadly in line with 2019, MBA's Michael Fratantoni told Rabouin.
Fratantoni went on to say that, "... six months ago I would’ve expected to see much more distress, particularly on the rental side."
In short, wrote Rabouin, "Government forbearance programs are keeping homeowners afloat."
In a deeper dig, the author goes on to offer evidence that "the stimulus delay isn't a crisis (yet)."
"If the impasse between House Speaker Nancy Pelosi and the White House on a new stimulus deal is supposed to be a crisis, you wouldn't know it from the stock market, where prices continue to rise," wrote the Markets author.
For that, he credits the $2 trillion CARES Act and the American people's uncanny "ability to save during the crisis." (In addition, Americans' credit scores also have improved [7].)
DS News also reported that the spring stimulus check went largely toward mortgage, rent, and household expenses [8].
Rabouin goes on to back up the idea that Americans benefitted from the first round of relief, and that, as David Wilcox, Senior Fellow at the Peterson Institute for International Economics, told Axios, "The CARES Act worked. It delivered a massive amount of financial support and put a huge financial safety net under families very quickly."
By the numbers, from the Axios article:
The median jobless worker received unemployment benefits "equal to 145% of their pre-job loss wages, compared to 50% in normal times" thanks to the CARES Act's $600-per-week unemployment supplement, a report [9] from the JPMorgan Chase & Co. Institute found.
- Additionally, the creation of special pandemic unemployment programs allowed millions more out-of-work Americans to access jobless benefits, which amounted to 7% of total personal income in June — a record far exceeding the 1.3% peak during the Great Recession.
- Unemployed Americans "roughly doubled their liquid savings over the four month period between March and July 2020." The report notes, however, that they "then spent two-thirds of the accumulated savings in August alone."
The results: The percentage of people who said their ability to afford household goods had improved was the highest since early June in the latest Axios/Ipsos nationwide poll, tied for the best since the survey began in March.
Not all of the data is so cheery. The reporter cites a study that shows poverty and food insecurity increasing in households with children.
While the economy has held up unexpectedly well, he wrote, the latest jobs report is showing signs of strain. He returns to the MBA's Fratantoni, who says a new stimulus bill, at worst, would be a "form of insurance on the recovery."
"If you’re a policymaker," Fratantoni told Rabouin having that insurance or risk management mindset makes a lot of sense right now."